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Crowdfunding donations reinvent what a charity is

A growing number of non-profits are modelling themselves on technology start-ups rather than traditional charities, allowing donors to give direct to a cause

By Rachel Nuwer

No longer needed?

(Image: Redsnapper/Alamy)

CHASE ADAM, a Peace Corps volunteer, was bumping along a road near the Panama-Costa Rica border when a woman boarded his bus. Clutching her son’s medical records, she asked each passenger for a small donation to help fund his treatment, which she couldn’t afford. To Adam’s surprise, nearly every passenger donated.

The woman was essentially crowdfunding her son’s treatment, Adam realised, but she was restricted to asking only those around her for help. What if there was a way to expand that approach by tapping into the global community?

Inspired, Adam co-founded Watsi, a non-profit organisation named after the town where the woman boarded the bus. He describes it as “Kickstarter for healthcare around the world” as it uses crowdfunding to pay for treatments for those in need, identified by hospitals that work with Watsi.

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Since launching in 2012, Watsi has funded healthcare for nearly 3000 people in 19 countries. Earlier this month, it launched the Universal Fund, a recurring monthly donation system that distributes funds to those who need it most. So far, nearly 700 donors have signed up.

Watsi isn’t the only non-profit modelling itself on technology start-ups rather than traditional charities. Donors Choose enables backers to fund US school projects; Kiva allows you to lend small amounts of money to individuals in developing countries and Omakase handpicks charities for donors to support each month.

“We’re different to traditional non-profits that have long cycles of grants and projects, and feedback that happens over years rather than days or weeks,” says Shivani Garg Patel, co-founder of Samahope, which raises funds to support individual doctors in developing countries, especially those who are treating women and children.

After raising more than &dollar;1 million from Silicon Valley philanthropists to get Watsi off the ground, the team behind the project is now supported by optional tips from the site’s users, which account for 8 per cent of all donations. Samahope donors can also give part of the sum to the organisation, which keeps the site going alongside funds from foundations and businesses.

Whether these approaches will be sustainable or more effective than traditional non-profits remains to be seen. “There’s almost a cult of innovation here,” says Lucy Bernholz at the Stanford University Center on Philanthropy and Civil Society. “So even if something is working and has been around for a long time, the zeitgeist is almost ‘If it works, break it’.”

The crowdfunding model is best suited to charity work that delivers an instant reward, she says – a patient healed, a life saved – rather than projects tackling things like poverty and inequality, or ones that require scientific research, which may take years to come to fruition. “The downside is that we start loving things that allow us to check off boxes and give us instant gratification,” Bernholz says. “Finding long-term support for structural changes is the bigger question.”

Grace Garey, Watsi’s co-founder, acknowledges that crowdfunding isn’t the only business model for charities. “But I do think that every non-profit will have to fall in line with this idea that technology is making the world smaller,” she says. “People don’t just want to know where their money goes – they expect to meet the people on the other end.”

People don’t just want to know where their money goes – they expect to meet the people who benefit

This article appeared in print under the headline “Time to donate direct”